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How Will I Know When To Sell My Gold?

NEVER sell your gold because you want to hold it for the rest of your life and pass it on to your grandchildren.OrSell your gold NOW (big mistake – my opinion) if you believe that
gold is in a bubble or never should have been bought (as per
“gold-bashers” Warren Buffett and Charlie Munger).Most of us will sell sometime between now and never. What is an objective method to determine when to sell?

Technical ratios at which it might be sensible to sell some of your gold

Sell some gold when the gold to silver ratio drops
down to around 15 to 1. The gold to silver ratio is currently about 51
to 1. When gold and silver prices have both risen beyond all typical
expectations, the ratio will probably drop to between 10 and 20 to 1.
The ratio was about 17 to 1 at the bubble peak in 1980.Sell some gold when the Dow Jones Industrial Average
(DOW) ratio to gold (DOW/Gold) has dropped to near 1 to 1. The ratio is
currently about 7.5 to 1. The ratio could reach 1 to 1, for example, if
the Dow were priced at 10,000 and gold was selling for $10,000 per
ounce. At the peak of the 1980 gold bubble, the ratio was approximately 1
to 1.Sell some gold when the gold to crude oil ratio
rises to perhaps 30 to 1. For example, if crude oil is priced at $300
per barrel and gold is priced at $9,000, that is a 30 to 1 ratio. In
1980 the peak ratio was about 25 to 1.Sell some gold when you can pay off the entire mortgage on your house with 10 to 20 ounces of gold.(I suggest you only sell “some” of your gold, not all of it, because
it is always a good idea to keep some “real money” and not be utterly
dependent upon unbacked paper currency.)

Sentiment-based timing to consider selling gold

Sell some gold when the “money honeys” on financial TV are running one story per hour on the rapidly rising price of gold.Sell some gold when Time magazine posts a picture of gold bars on their cover with a caption “The new bull market in gold.”Sell some gold when your hairdresser/barber gushes about the gold she/he just bought and how it is sure to triple in price soon.Sell some gold when there are lines of people waiting at coin shops to buy gold.Sell some gold when people finally realize that “money (unbacked
paper money) is accepted only because money is accepted,” and people
have become reluctant to accept paper money.Sell some gold when people have realized that money only has value because people have faith in its value, and people have finally lost faith in unbacked paper money.Additional thoughts: Jim Sinclair suggests that, regarding gold, people should “buy fish lines and sell rhino horns.”
Stated another way, when the price has collapsed in a price spike down
(looks like a fish line extending downward from a fishing pole) then we
should buy. But if the price has risen in a parabolic pattern (looks
like a rhino horn), then it is time to sell a portion and wait for the
correction. If the price has fallen too for, too fast,
and there is no fundamental reason for the price collapse, buy more. If
the price has rapidly rallied to new highs far beyond expectations, then
it has moved too far, too fast. Those markets rallies,
whether in gold, silver, the NASDAQ, crude oil, or real estate, always
seem to correct in a crash. Examples include Gold and Silver in early
1980, the Nikkei 225 in 1990, and the NASDAQ in early 2000. It
seems likely that gold and silver will go into a parabolic rise within a
few years unless the money printing ceases – and we should plan on the
money printing continuing for a LONG time.The common denominators are the human emotions of fear and greed. In
simple terms, greed drives the market to new highs and fear causes the
crash. People were “getting rich quick” when the NASDAQ rallied from
about 1,100 to about 5,000 in less than 2 years – when greed had the
upper hand. But when the NASDAQ reached a natural stopping point, fear
took over and people sold in panic or to preserve what value remained.
If they did not sell and rode the market all the way down, they lost a
significant portion of their investment and paper profits. Fear caused
people to sell, which created more fear and selling, and the waterfall
decline fed upon itself until the sellers were exhausted.Similarly, in 2008, when gold had collapsed from over $1,000 to under
$700 (the price today is about $1,700) in seven months, most amateur
investors were reluctant to buy because they were fearful that the price
of gold would decline further. Professionals buy the bottoms and sell the tops. Fearful amateurs sell down into the bottoms and then buy back near the tops when greed takes over.If you bought gold, which is currently in a long-term uptrend, then
waiting will eventually bring success, even if you purchased at a
temporary top. However, if you were buying Enron Stock some years ago,
then waiting only magnified the disastrous investment. Study the
fundamentals of your investments until you understand the differences.When will gold reach $4,000?The Bottom Line: Buy when the “blood is running in the streets,” and
sell when everyone else wants to buy. Use ratios from other markets as
objective measures to indicate probable price extremes in markets. We
can seldom pick the precise bottoms and tops, but we can carefully
observe while others are being swept along by their own fears and greed.
If we can keep our heads while others are losing theirs and make sound
decisions based on numbers, analysis, and comparison ratios to other
markets, we can make intelligent and informed buy and sell decisions.
For now, it makes sense to me to hold gold and silver and to carefully
evaluate everything else. Massive and supposedly unexpected changes can
occur with surprising rapidity.Article Source: TheDailySheeple